PC Contract and Project Management 2

Question 1

A contractor receives a change order request that would add $12,000 to the contract.
The owner asks the contractor to begin work immediately before signing the change order.
What is the most prudent course of action?

Accepted Answer

Refuse work until the signed change order is received

Answer

Begin work immediately to maintain good owner relations

Answer

Begin work but document the request in writing to the owner

Answer

Require a verbal agreement from the owner's representative

Question 2

Which contract clause typically allows the owner to order changes to the scope of work without voiding the contract?

Accepted Answer

Changes clause

Answer

Liquidated damages clause

Answer

Force majeure clause

Answer

Indemnification clause

Question 3

On a lump-sum electrical contract, the contractor discovers that the specifications contain an error that increases material costs by $8,000. Who typically bears this cost?

Accepted Answer

The owner, as errors in their provided documents are their responsibility

Answer

The contractor, since they submitted a fixed price

Answer

Split equally between contractor and owner

Answer

The design professional who created the specifications

Question 4

A project schedule shows a total float of zero on the critical path. What does this indicate?

Accepted Answer

Any delay on critical path activities will delay project completion

Answer

The project is ahead of schedule

Answer

The project has extra time built into the schedule

Answer

Non-critical activities have been completed early

Question 5

Under a unit price contract for electrical conduit installation, which party bears the risk of quantity variations?

Accepted Answer

The owner, because total cost changes with actual quantities installed

Answer

The contractor, because they bid the unit prices

Answer

Both parties share the risk equally

Answer

The surety company that issued the performance bond

Question 6

What is the purpose of a Notice to Proceed (NTP) on a construction contract?

Accepted Answer

It officially instructs the contractor to mobilize and begin work on a specific date

Answer

It authorizes the contractor to submit a bid

Answer

It confirms that the contractor's bond has been accepted

Answer

It grants the owner permission to occupy the building

Question 7

A subcontract contains a 'pay-when-paid' clause. Under most US state interpretations, what does this mean?

Accepted Answer

Payment to the subcontractor is conditioned on receipt of owner payment, creating a timing mechanism

Answer

The subcontractor is never paid if the owner doesn't pay the general contractor

Answer

The subcontractor must wait indefinitely for payment if the owner is in financial distress

Answer

The clause is generally unenforceable and the GC must pay within 30 days regardless